When the Market Wiggles, These 5%-13% Yields Don’t Waggle

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To retire on dividends, we have just two requirements. They are simple, though perhaps not exactly easy:

  1. Earn safe, meaningful yields. Five percent is our floor, thirteen is our stretch goal. We’ll discuss five stocks in this dividend range shortly.
  2. Keep our principal intact. To do this we’ll focus on “low beta” stocks—shares that move less than the broader market.

Beta says how much (or how little!) an investment moves compared to some benchmark. With stocks, beta is usually going to measure movement against the S&P 500.

Here’s an example. Let’s say a stock has a beta of 0.50.… Read more

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Don’t let the debt-ceiling fracas (or whatever doomsday scenario the media is obsessing over on any given day) distract you: this economy is better than it’s been in years—even if that hasn’t (yet) shown up in the stock market.

This disconnect between what the media is preaching and the facts on the ground is more than a fact—it’s an opportunity for us contrarian dividend investors. And we’re going to exploit it with our favorite investments: bargain-priced (and high-yielding!) closed-end funds (CEFs).

Thanks to all the irrational gloom out there, many CEFs still trade at attractive discounts. As the public comes around (and the data we’ll look at next shows they are), CEFs are likely to rise, both because of their low valuations and gains in the broader market.… Read more

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We were only a minute into our home-from-school commute. But I wasn’t going to last seven more.

“Hey!” I asserted in my dad voice. “If I hear any more whining about the air conditioning, it’s going off. And we’re rolling down the windows. And…”

I paused for effect and soaked in the temporary silence.

“We’ll drive home like it’s the 1980s.”

Two small gasps emerged from the back seat. My threat appeared to hit home.

My kids know from household folklore that car rides in the ‘80s were no joke. Seat belts were present, but not required. Smoking in the driver’s seat was common.… Read more

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There’s a $600-billion river of cash flowing straight out of Corporate America—and straight into some dividend investors’ pockets. Today we’re going to grab our share.

Companies don’t make much of the cash outlays we’re going to talk about. You might catch a line or two about them in an earnings release, but that’s it. That’s because they’re trying to stay below the radar of the Biden Administration, which is starting to tax these payouts, and has even threatened to quadruple the slice they’re taking now.

As for us, we’re not really focused on these cash payouts themselves (though we’ll happily take our share!).… Read more

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Few folks realize it, but there’s a great place to invest our money to profit from “DC drama” like the debt-ceiling fiasco. It’s literally hiding in plain sight.

I’m talking, oddly enough, about government debt! But not federal-government debt. Instead we’re going to bypass DC and go with municipal bonds, which are issued by sleepier (in a good way!) state and local governments to pay for infrastructure projects.

Because here’s what most folks don’t realize: “munis” do great when political shenanigans abound in DC. To see what I mean, think back to 2011, another period when a Republican House and a Democratic president scrapped over the debt ceiling.… Read more

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The stock market is coming off another sugar high, but REITs (real estate investment trusts) are still cheap. That’s great news to us income investors, who look past the piddly paying blue chips on the S&P 500. We prefer REITs because they pay, and we appreciate a deal when we see one:

REITs Remain Near Their Bear-Market Lows

REITs are on the mat because the Federal Reserve has relentlessly hiked rates. Good. Those of us who want to retire on dividends alone love how wide REITs’ yield spread over basic stocks has become.

Even a vanilla fund like Vanguard Real Estate ETF (VNQ) is a better income source than “America’s ticker”—VNQ yields 4.1% while SPDR S&P 500 ETF only pays 1.6%.… Read more

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There’s a lot of rhetoric flying around about the debt ceiling these days, and it’s set up a very nice opportunity for us to buy a 7%-yielding closed-end fund (CEF) we always have on our watch list.

That would be the Nuveen Nasdaq 100 Dynamic Overwrite Fund (QQQX). 

A good way to think of QQQX is like a NASDAQ index fund but with higher dividends and a smart way to turn volatility into extra dividend cash. I say QQQX is like a NASDAQ index fund because its holdings mirror those of the Invesco QQQ Trust (QQQ), including all the big-cap techs we all know well:

Source: Nuveen

QQQX, like QQQ, tracks the NASDAQ 100, so it’s no surprise that you’ll see great tech firms in its portfolio.… Read more

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Vanilla energy bulls stare at XLE. So basic.

Meanwhile, we “second-level” contrarians consider NRGX as a high-yield play on higher oil prices.

What’s the difference? Well, PIMCO Energy & Tactical Credit (NRGX) yields 6.1% while first-level favorite Energy Select Sector SPDR Fund (XLE) yields 4%.

So we bank 50% more dividend when we look past the popular ETF for a little-known CEF (closed-end fund).

But wait, there’s more. XLE always sells for fair value. It holds blue-chip producers like Exxon Mobil (XOM) and Chevron (CVX). Fair enough. But we’re paying $1 for a dollar in assets.

That’s OK.… Read more

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This week, we’re going to pick up some rich 8%+ payouts alongside … Taylor Swift?

You read that right. Turns out the favorite singer of everyone from, well, my two daughters to the attorney general of the United States is a fan of our favorite income plays: closed-end funds (CEFs).

That news broke in the form of a tweet from billionaire investor Boaz Weinstein, head of Saba Capital Management. Weinstein apparently heard from Swift’s dad (who used to work for Merrill Lynch) that the singer does, indeed, hold CEFs.

“Having a blast watching our daughters sing every lyric tonight in Philly,” Weinstein tweeted.… Read more

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When I talk to investors about closed-end funds (CEFs), I get an almost universal reaction: they simply can’t believe the outsized dividends—and upside potential—these funds boast are for real.

I’ll admit, if you’re not familiar with CEFs, their many benefits do sound a bit over the top: a pocket of funds that yield 7.5% on average, yet hold investments we’re all familiar with, such as shares of Alphabet (GOOGL) and Mastercard (MA)? 

The outsized payouts seem particularly unreal when you consider that most of these blue chips pay low (or no) dividends themselves. And that’s before we get into the fact that CEFs can hold a range of other investments beyond stocks, like corporate bonds, real estate investment trusts (REITs) and municipal bonds.… Read more

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